Texas governor, senator challenge ethanol rule

28 April 2008 23:50  [Source: ICIS news]

WASHINGTON (ICIS news)--Texas Governor Rick Perry and Senator Kay Bailey Hutchison (Republican-Texas) are leading a multi-front effort to sharply reduce or even overturn the new federal biofuels mandate, their spokesmen confirmed on Monday.


Arguing that ethanol-driven increased demand for corn is causing “skyrocketing” prices for both human foods and livestock feed, Perry, also a Republican, has filed a formal request with the US Environmental Protection Agency (EPA) to reduce the newly enacted renewable fuel standard (RFS) by 50% across the country.


Perry’s spokeswoman, Allison Castle, said the governor also has sent letters to an unspecified number of other governors, urging them to make similar appeals to the agency.


Hutchison is circulating a letter among her Senate colleagues to urge EPA to provide guidelines for state waiver requests, and her spokesman said that 20 other members of the 100-seat Senate have already signed on to the appeal.


In addition, Hutchison spokesman Matt Mackowiak said the Texas senator is drafting legislation that essentially would eliminate the new renewable fuels requirement.


The Energy Independence and Security Act (EISA), passed by Congress and signed into law by President George Bush late last year, mandates US renewable fuel production and consumption of 36bn gal/year by 2022, including some 15bn gal/year of corn-based ethanol.


Current US output of bio-ethanol is about 8bn gal/year and is wholly corn based.


In his request for a cutback in the renewable fuel standard, Perry said that corn prices have increased 138% and general food prices are up 83% in the last three years globally, at least in part due to ethanol-driven demand for corn.


“With implementation of the new RFS mandate [the 36bn gal/year requirement], some estimates predict corn prices will rise to $8/bushel for the 2008 crop,” Perry said.


“The artificial demand for grain-derived ethanol is devastating the livestock industry in Texas and needlessly creating a negative impact on our state’s otherwise strong economy while driving up food prices around the world,” Perry charged.


The EISA statute provides that EPA may waive the renewable fuels mandate if it is determined that the biofuels requirement is causing significant harm to a state or region.


Legislation that Hutchison is to introduce later this week will freeze the new ethanol mandate at its targeted 2008 level of 9bn gal/year, Mackowiak said. 


Such a move essentially would end the renewable fuels mandate.  Given the popularity of corn ethanol in Congress, Hutchison’s bill would be a tough sell, especially in this election year.  However, the new ethanol mandate has already raised concerns in Congress that the targeted goal is too high.

By: Joe Kamalick
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